The court of appeal: NBU illegally placed Lahun`s "Astra Bank" into an insolvency category

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On September 19, the Sixth administrative court of appeal refused to satisfy the appeal complaints of NBU and “Agro Holdings (Ukraine) Limited” company (which joined to “Agroprosperis Bank”, Deposit Guarantee Fund, liquidator of Delta Bank) and affirmed decision of the District administrative court of Kyiv city dated 26.04.2019 (in case No.826/8333/15), which satisfied a claim of Kalouma Holding Limited and cancelled the NBU’s resolution No.186 dated 19.03.2015 of referring Astra Bank to an insolvency category.

According to the NBU, Kalouma Holding Limited was the owner of 100% of Astra Bank shares. At the same time, Astra Bank was a part of Delta Bank Group (the majority shareholder of which was Mykola Lahun).

On July 16, 2015 the Guarantee Fund sold Astra Bank to Agro Holding (Ukraine) Limited, a subsidiary of NCH Capital (USA) investment fund, which finances Ukrainian agricultural manufacturers. Astra Bank currently operates under the brand name Agroprosperis Bank.

In its official statement on the recognition of Astra Bank as insolvent, the NBU noted that in February 2015 the bank was classified as a problematic one "due to risky activities, threats to the interests of depositors and other creditors" (quote).

As noted by the regulator, Astra Bank placed significant amounts of funds on its correspondent account in Delta Bank (which had liquidity problems; on October 30, 2014 it was classified as problematic). According to court materials, it was about UAH 163,8 million that made 91,2% from assets and 100,9% from regulatory capital of Astra Bank. According to the National Bank, when Astra Bank sent a request to Delta Bank to return these funds to a correspondent account of the NBU, Delta Bank did not comply with this request.

Also, the NBU pointed out that after the classification of Astra Bank as a problematic, by the National Bank "there were no acceptable and convincing proposals for the financial rehabilitation of the bank," "the owner of the bank did not take measures to provide financial support to the bank in order to bring its activities in line with the requirements of the legislation" (quotations).

Satisfying the claim of Kalouma Holding Limited, the court pointed out, among other things, that on February 25, 2015 the volume of funds of clients in Astra Bank amounted to UAH 6.13 million, which were covered by highly liquid assets of the bank to UAH 8.46 million (including funds on correspondent accounts in the NBU to UAH 3,28 million and UAH 4.92 million in other commercial banks, except Delta Bank).

The quote from the decision of the District Administrative Court of Kyiv dated April 26, 2019 is given below:

"That is, the funds of Astra Bank (except for the funds in the correspondent account of Delta Bank) were sufficient to ensure the fulfillment of customers` requirements on demand. At the same time, the National Bank of Ukraine did not specify the reasons for accounting only of the funds that were on the correspondent account of the National Bank of Ukraine, as well as the reasons for not accounting of other highly liquid assets available in Astra Bank.

Also, defendant-1 [National Bank] unreasonably rejected the appeal of the plaintiff of March 17, 2015 to improve the financial condition, reduce the cost of depreciation of non-current assets, consent to the sale of fixed assets not used in current operations in connection with the closure of branches in the amount of UAH 5 071 217.41.

A copy of Form 611 available in the case file for the period from March 3, 2015 to March 20, 2015 provides for the plaintiff to bring the economic standards of the limits in line due to the attraction of additional assets that are not accounted for by the defendant-1".

It is worth mentioning, that at the end of May, the NBU reported that the Supreme Court refused to satisfy the appeal of Mykola Lahun and left unchanged the decision of the lower courts, which confirmed the validity of the National Bank`s decision on the legality of the withdrawal from the market of Omega Bank (which was also controlled by M. Lahun).